FirstCash Holdings Inc.

The negative outlook reflects the company's elevated leverage of above 4.0x. Although we expect the company to deliver strong results, which will allow it to lower leverage, we expect debt to EBITDA will remain elevated at roughly 3.0x over the next 12 months. We could lower the rating if large debt-funded initiatives, weaker-than-expected markets, or adverse regulatory changes weaken the company's credit measures. Specifically, we could lower the rating if: We expect debt to EBITDA to remain above 3.0x because of lower-than-expected profitability or an increase of debt-funded spending, or Operational issues or business mix push adjusted EBITDA margins closer to 15%. We could revise the outlook to stable in the next 12 months if the company reduces and sustains

...We expect FirstCash Inc.'s leverage to be at or near 3.0x debt to EBITDA by the end of 2022. Debt used to fund the acquisition of American First Finance (AFF) pushed leverage to 4.2x at the end of 2021. We expect leverage to decline to approximately 3.0x by the end of 2022 on the addition of earnings from AFF and earnings growth in pawn lending. We expect demand for pawn lending to recover to pre-pandemic levels in 2022. The company reported lower pawn loan demand in 2020 and 2021 due to government stimulus. As the effects of the stimulus wane, we expect pawn loan originations to increase....

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